Deciphering Financial Statements (Ford Motor Company)
The consolidated statement of income for Ford Motor Company appears at the top of the following page.
1. What is the first thing you notice about the way revenues and expenses are partitioned?
2. For the Automotive division, compute the ratio (Cost of sales/Sales) for each of the three years presented. Interpret the results.
3. Look at the operating results for the Automotive division. Is there any good news for Ford in these results?
4. Depreciation expense is reported by the Financial Services division but not by the Automotive division. Explain why the Automotive division does not report depreciation expense.
5. Which of the company’s two divisions seems to be performing better over time?
6. Is Ford a car company that finances automobiles or a finance company that makes cars?
|
Ford Motor Company and Subsidiaries Consolidated Statement of Income |
|||
|
|
For the Years Ended December 31 |
||
|
|
2004 |
2003 |
2002 |
|
(in millions) |
|
|
|
|
AUTOMOTIVE |
|
|
|
|
Sales |
$147,134 |
$138,260 |
$134,120 |
|
Costs and Expenses |
|
|
|
|
Cost of Sales |
135,856 |
129,685 |
125,027 |
|
Selling, administrative and other expenses |
11,455 |
10,131 |
9,697 |
|
Total Costs and Expenses |
147,311 |
139,816 |
134,724 |
|
Operating Income(loss) |
177 |
1,556 |
604 |
|
Interest Expense |
1,221 |
1,323 |
1,333 |
|
Interest Income and other non operating income |
|
|
|
|
(expense), net |
988 |
897 |
974 |
|
Equity in net income(loss) of affiliated companies |
255 |
74 |
91 |
|
Income(loss) before income taxes—automotive |
155 |
1,908 |
1,054 |
|
FINANCIAL SERVICES |
|
|
|
|
Financial Services revenues |
24,518 |
26,078 |
28,138 |
|
Costs and Expenses |
|
|
|
|
Interest Expense |
5,850 |
6,320 |
7,468 |
|
Depreciation |
6,618 |
8,771 |
10,154 |
|
Operating and other expenses |
5,830 |
5,492 |
5,345 |
|
Provision for credit and insurance losses |
1,212 |
2,248 |
3,053 |
|
Total Costs and Expenses |
19,510 |
22,831 |
26,020 |
|
Income(loss) before income taxes—financial services |
5,008 |
3,247 |
2,118 |
|
TOTAL COMPANY |
|
|
|
|
Income(loss) before income taxes |
4,853 |
1,339 |
1,064 |
|
Provision for(benefit from) income taxes |
937 |
123 |
342 |
|
INCOME(LOSS) BEFORE MINORITY INTERESTS |
3,916 |
1,216 |
722 |
|
Minority interests in net income(loss) of subsidiaries |
282 |
314 |
367 |
|
INCOME FROM CONTINUING OPERATIONS |
3,634 |
902 |
355 |
|
Income(loss) from discontinued operations |
147 |
143 |
333 |
|
Cumulative effect of change in accounting principle |
— |
264 |
1,002 |
|
Net income (loss) |
3,487 |
495 |
980 |